WISN 12 news reporter Kent Wainscott investigates the mistake that may be costing them thousands of dollars.

It was a bombshell notice from UW-Milwaukee.

"What is this? More student loans? I thought I was done with that," 2005 UWM graduate Josh Legan said.

Legan was notified more than eight years later that he had a student loan which had been overlooked in the system, and that it carried $2,300 in interest.

"I have no problem paying the loan, but to get hit with almost $2,300 in interest out of the blue," Legan said.

When the university notified Legan that interest was accumulating all the while without his realizing it, he was especially surprised because he works as a bank loan officer.

"I would not let it get to that point had I known about this seven years ago," Legan said.

WISN 12 News has learned that Legan is not alone. The problem may be widespread.

Here's what went wrong: The university contracted with a private firm to notify and bill graduates who have student loans. That company, which contracts with the entire UW system, incorrectly processed the information.

When they learned of the first case, UWM vice chancellor Tom Luljack told WISN 12 News the school conducted an investigation and discovered about 1,000 former students who had not been billed on certain federal loans, going back to 2005 and earlier.

"I was shocked when I got the letter," Legan said.

The school has been contacting the students, but the bad news for Legan and the others, is that the U.S. Department of Education said the students are required to repay any interest on those loans, whether they knew about it or not.

UW-Milwaukee told WISN 12 News it is working with students on repayment plans, and the university has set up a system to review all accounts quarterly for any errors.